Pepco Multiyear Rate Plan — FC1176

 

Overview

Pepco submitted an application to the Public Service Commission of the District of Columbia for a Multiyear Rate Plan, originally referred to as the "Climate Ready Pathway," in April 2023. After a lengthy review process, the Commission initially approved a modified version of this plan in late 2024, which authorized Pepco to adjust its electric distribution rates over a two-year period (2025-2026).

However, the regulatory process for this specific case is still ongoing due to a recent court ruling that requires the Commission to gather more evidence before making a final, permanent decision.

2024 Application Approval

When the Commission originally approved the modified rate plan in November 2024, it authorized an increase of $123.4 million over two years (2025-2026). This was broken down into a $99.7 million increase for 2025 and a $23.7 million increase for 2026. To balance the approved rate increase, the Commission’s original approval included several strict accountability and consumer protection measures:

• A $15.3 million penalty levied on Pepco for prior billing errors, alongside a reduction in the utility's recoverable capital expenditures by 19% in 2025 and 40% in 2026.
• Low-income customers enrolled in the Residential Aid Discount (RAD) program were completely exempt from the rate increases, preserving their access to free electric distribution services.
• New requirements were established for quarterly and annual reporting, independent audits, and automatic credit adjustments to prevent overearning.

Pepco filed its updated compliance tariffs in December 2024, and the approved rates went into effect at that time.

2026 D.C. Court of Appeals Ruling

The D.C. Court of Appeals issued a decision in March 2026 regarding the Commission's initial approval of the rate plan. The Court vacated the Commission's previous orders and remanded the case back to the Commission for further proceedings.

It’s important to note that the Court’s decision was only procedural in nature. The Court determined that the Commission needed to hold a formal trial-type evidentiary hearing and provide a more detailed explanation for certain bill components, specifically the Effective Rate Adjustment and the Bill Stabilization Adjustment.

Importantly, the Court did not find that the rates themselves were unjust, unreasonable, or unlawful. The ruling also did not order the Commission to suspend the current rates, revert to older rates, or issue immediate refunds.

The Impact on District Electric Bills

Because the Court's ruling focused on the procedural steps rather than the actual cost of the rates, the Commission has reauthorized the rates from Pepco's December 2024 compliance filing to remain in place while the new hearings are conducted.

The Commission chose to maintain these current rates to protect customers from unnecessary disruption. Reverting back to older rates while the review is still happening could create significant administrative complications and lead to unpredictable, abrupt rate volatility in the future. Keeping the rates steady provides regulatory stability while the Commission completes its legally required review.

Note that these current rates are not necessarily final; they serve as a bridge until the remand process is complete. Once the upcoming evidentiary hearing concludes, the Commission will issue a final order. If that final decision determines that different rates are appropriate, the Commission will make the necessary prospective adjustments, reconciliations, or refunds at that time.

Ongoing Consumer Protections and Oversight

While the rate case undergoes the remand process, the Commission continues to actively monitor Pepco's performance and protect vulnerable residents.

As part of this oversight, the Commission addressed the future of the Senior Citizen and Disabled Residents Rate Credit after its initial funding was exhausted. To prevent this critical program from ending abruptly, the Commission authorized a one-year regulatory asset capped at $1.5 million to continue the credit through September 30, 2026. The Commission also hosted a technical conference in November 2025 to evaluate the long-term feasibility of the program.

The Path Forward

To comply with the Court's instructions and ensure a fully transparent process, the Commission has established a revised schedule for this case.

To ensure the final decision is based on the most accurate and up-to-date information, Pepco is required to submit updated supplemental testimony that includes actual financial expenditure data from 2024 and 2025. After this information is filed, other parties involved in the case will have the opportunity to review the data and submit their own direct and rebuttal testimony.

This process will culminate in a full evidentiary hearing, ensuring that all factual disputes and rate-design issues are fully examined on a complete record.

Hearings

Evidentiary Hearing

The Commission has scheduled an evidentiary hearing in this case for October 13-14, 2026, and will announce the exact location and time of the hearing in a forthcoming public notice.

Community Hearings

The Commission held three community hearings across the District (in Wards 8, 5, and 2) in March/April 2024 to gather input from residents and other stakeholders in this pending rate case.

Legislative-style Hearing

The Commission held a legislative-style hearing in July 2024 for Pepco to present its investment strategies, proposed alignment with the District’s climate goals, its communication with the District and District residents, and the merits of traditional versus multi-year rate cases.

 

Timeline

Past Milestones

• April 13, 2023: Pepco filed an initial application for a Multiyear Rate Plan.
• November 26, 2024: The Commission approved a modified version of the Multiyear Rate Plan.
• December 11, 2024: Pepco filed its updated compliance filing, establishing the new rates.
• November 12, 2025: The Commission held a Senior Citizen and Disabled Residents Rate Credit technical conference.
• March 5, 2026: The D.C. Court of Appeals issued a decision vacating the Commission's previous orders and remanding the case for an evidentiary hearing.
• May 8, 2026: The Commission reauthorized the current rates to remain in effect and establishing a revised procedural schedule for the remand.

Upcoming Milestones

• October 6, 2026: Pre-Hearing Conference
• October 13–14, 2026: Evidentiary Hearing